Nokia's Second Quarter Exceeds Expectations

Nokia delivered a strong improvement in the second quarter of 2020. The company had better-than-expected profitability, with significant improvement in cash generation and increase in earnings-per-share.

Nokia estimated it took a €500 million short-term hit due to the COVID-19 pandemic which, combined with a decline in China, led to a revenue dip. The Finnish vendor posted revenue of €5.1 billion, down 11% year-on-year, but it turned profit of €85 million from a €191 million loss in the same period last year.

"In Mobile Access, we saw healthy improvements in our radio portfolio, where roadmaps are strengthening, costs are coming down, and product performance is rising. We have a particularly powerful portfolio in mid-band mobile radio, with proven products deployed with 55 customers, and the first live C-Band network demonstrated in the U.S. during the quarter. Pleasingly, our 5G Powered by ReefShark shipments continue to increase and we believe we remain on track to reach 35% or better by year end. And, we now have 83 5G deals," said Rajeev Suri, outgoing CEO that was replaced yesterday by Pekka Lundmark.

Net sales from Networks business dropped 10% to €4 billion. There were also declines across its other units, with Software down 10% to €597 million and Technologies 12% lower at €341 million. For Networks and Software, the company said it underperformed due to lower infrastructure deployment services within mobile access and increased competition, however it expects an uplift at the end of the year as 5G demand increases. Suri added the company continues to make progress in mobile access, explaining it made improvements with its radio portfolio.